|Researchers at LG Chem’s electric vehicle battery plant in Ochang, North Chungcheong Province (LG Chem)|
LG Chem will split off its battery business, in an apparent move to shore up investments through an initial public offering, according to industry sources Wednesday.
LG Chem has decided to carve out the battery business division as a wholly owned subsidiary and finalize the agenda at a board meeting scheduled for Thursday, they said.
“For LG Chem to digest battery orders, it needs to increase its production capacity, which will cost billions of dollars. To deliver required funds, going public and getting investments is the surest way,” an industry official said.
In the second quarter, LG Chem’s battery business division posted a record operating profit despite factory shutdowns of automaker clients in Europe and China. At the conference call, LG Chem Chief Financial Officer Cha Dong-seok said he was considering multiple ways regarding the split-off to improve shareholder value. The remark triggered market speculations that LG Chem was preparing a split-off within this year or by April next year.
“LG Chem is categorized as a chemical company in the stock market. When the battery business division is grouped together with other businesses such as petrochemical business, it’s difficult to allocate investments. It’s better for LG Chem to split off if it wants the battery business division to be recognized,” another industry official said.
An LG Chem official, meanwhile, said, “LG Chem can’t confirm any details about the board meeting.”
By Kim Byung-wook (firstname.lastname@example.org)